Question

COURCES Exercise 14-5 (Part Level Submission) On October 1, Little Bobby Corporation's stockholders' equity is as follows. Common stock, $5 par value $383,500 Paid-in capital in excess of par-common stock 25,000 Retained earnings 169,000 Total stockholders' equity $577,500 Part On October 1, Little Bobby declares and distributes a 10% stock dividend when the market price of the stock is $14 per share. (a) Study Your answer is correct. Compute the par value per share (1) before the stock dividend and (2) after the stock dividend. Par value before the stock dividend Par value after the stock dividend Click if you would like to Show Work for this question: Open Show Work

Answer 1

Answer:

Common Stock Balance          = Current balance + 10% Stock dividend          = $ 383,500 + ($ 383,500 x 10% )          = $ 383,500 + $ 38,350          =    $ 421,850

Common Stock = $ 421,850

No. of Common shares = $ 383,500 / $ 5   = 76,700 Shares

Paid in capital in excess of par value Balance         = Current balance + Additional paid in capital from stock dividend         = $ 25,000 + (76,700 shares x 10% x ( $ 14 (-) $ 5)         = $ 25,000 + $ 69,030         =    $ 94,030

Paid in capital in excess of par value = $ 94,030

Retained earnings Balance       = Current Balance   (-) Dividends       = $ 169,000 (-) (76,700 shares x 10% x $ 14 )       = $ 169,000 (-) $ 107,380       =   $ 61,620

Retained earnings Balance =   $ 61,620